TMI Blog2020 (7) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... l loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O s had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O s. Further, the A.O s has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement in the assessment orders that there have been disbursement of loans to non-members as well. In the light of the dictum laid down by the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. The A.O. shall list out the instances where loans have disbursed to nonmembers of assessee-societies, for non-agricultural purposes et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Aggrieved by the orders passed by the Assessing Officer disallowing the claim of deduction u/s 80P(2) of the I.T.Act, the assessees preferred appeals before the first appellate authority. The CIT(A) placing reliance on the judgment of the Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [(2019) 414 ITR 67 (Ker.) (FB) (HC)] held that the Assessing Officer had made elaborate findings and has come to a factual finding that agricultural credit provided by the assessees is only minuscule and assessees cannot be termed as primary agricultural credit society. Accordingly disallowance of claim of deduction u/s 80P of the I.T.Act made by the Assessing Officer was upheld by the CIT(A). In the result the appeals filed by the assessees were rejected by the CIT(A) for assessment years under consideration. 6. Aggrieved by the orders passed by the CIT(A), the assessees have preferred these appeals before the Tribunal, raising identical grounds, which read as follow:- 1. The order of the Learned Commissioner of Income Tax(Appeals), Thrissur in so far as it is prejudicial to the interests of the appellant is opposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The appellant is eligible for complete exemption from tax on application of the doctrine of mutuality. 10. The status of the appellant as AOP as fixed by the AO is not correct with the result that the order passed in the status of AOP is liable to be quashed. 11. It is submitted that the the Special Leave Petition challenging the full bench decision of the Hon'ble Kerala High court in Mavilayil case ITA No: 97/2016 has been admitted by the Hon'ble Supreme Court and the matter is pending. 12. It is submitted that the Chirakkal case is applicable to the appellant in view of the binding decision of the Hon supreme court in Vadilal Chemicals ltd Vs State of AP where it is stated that no tax authorities can reject a binding certificate. It is submitted with utmost respect to the Hon court that the decision to the contrary in Mavilayil case is to be reconsidered as one rendered per incurium. 13. The appellant is eligible for deduction of ₹ 50,000/- u/s 80P(2)(c) of the Act in case all the above grounds are found rejected. For these amongst other grounds that may permitted to be raised and evidences adduced at the time of hearing it is prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IT Act, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P. 33. In Chirakkal [384 ITR 490] the Division Bench held that the appellant societies having been classified as Primary Agricultural Credit Societies by the competent authority under the KCS Act, it has necessarily to be held that the principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances to be at the rate to be fixed by the Registrar of Co-operative Societies under the KCS Act and having its area of operation confined to a Village, Panchayat or a Municipality and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the IT Act to ease themselves out from the coverage of Section 80P and that, the authorities under the IT Act cannot probe into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Necessarily, the A.O s had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O s. Further, the A.O s has not examined to what extent loans, if any, has been disbursed to nonmembers. There is a passing statement in the assessment orders that there have been disbursement of loans to nonmembers as well. In the light of the dictum laid down by the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra), we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. The A.O. shall list out the instances where loans have disbursed to nonmembers of assessee-societies, for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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